In December last year the Association of British Insurers (ABI) looked again at the issue of annuity rates and launched a fresh consultation into improving customer awareness of the shopping around process for better annuity rates at retirement. Improving the use of the open market option for securing higher retirement incomes for people has been one of the key issues facing the at-retirement market over the years. In December the ABI launched an industry consultation to try and assess how this can be best achieved. One change already announced is for members to remove annuity application forms from at-retirement wake up packs as a means of encouraging individuals nearing their retirement to go on to the open market to find the best deal for their particular circumstances.
The ABI consultation on getting better pension annuity rates, which runs until February this year, will get industry opinion on the proposed code of conduct including: should all communication with customers include a standard statement on the very first page about the benefits of using the open market option and shopping around for a better deal; should examples of possible annuities provided by the insurer be allowed which have not been requested by the customer, and, if so, these examples must follow strict rules to ensure all the various options are compared and include a very clear statement about the increased income benefits of enhanced annuities due to medical or lifestyle conditions even if the insurer does not offer the product; and that insurers’ sales processes must take people through the key questions they should take into consideration when buying an annuity for their impoerant retirement income.
What we would like to see as a result of this consultation is for shopping around for an annuity to become the norm at retirement and a decision that is similar in the public’s mind as shopping around for car insurance, suggests Yvonne Braun of the ABI. She adds that the ABI want people to have increased knowledge and awareness about the products that are available and what needs to be done. Ultimately, the ABI want to see people get the most from their important retirement income, and that is also our aim at rightannuity.co.uk.
The ABI will gather the various industry responses before putting the finishing touches to the code of conduct in March this year. However, what is clear to many is that while putting a defined at-retirement process in place will undoubtedly go some way to improve peoples’ shopping around experience there is actually still a long way to go in terms of customer awareness and educating people about the various options available. Whilst the ABI has made good progress towards solving the whole issue of the open market option and shopping around it is important to take on board that this is only part of the overall solution as it currently stands.
